As an entrepreneur of a startup or small business, funding your company can be difficult and navigating the different funding options, confusing. Thankfully, expert panelists at the Invent Penn State Venture & IP Conference provided your best advice for choosing a financial plan and preparing you application.

Finding the Right Investors

Joe Herbst is a managing partner of Robin Hood Ventures, a Philadelphia based venture capital company.

The first step is figuring out what type of financial plan is best for you.

Joseph Herbst, managing partner at Robin Hood Ventures, has very simple advice to get you started: if you can grow your company through borrowing either no money or as little money as possible, always take that option. It will take longer to move forward and grow, but you will always have complete control of your business, and your finances won’t be dependent on meeting specific benchmarks at a certain time.

However, this method isn’t always feasible.


Most entrepreneurs will need to look to outside sources of funding. One option is America’s Seed Fund, which has two programs: SBIR and STTR. Eleven federal agencies participate in the SBIR program and five participate in the STTR program.

SBIR and STTR both award funding to innovative businesses, but differ slightly in purpose. SBIR grants primarily fund research and development and STTR focuses on expanding public/private sectorpartnerships to include non-profit research institutions.

There are two other key differences between the programs an entrepreneur must be cognizant of. First, according to, “In an SBIR project, the principal investor must be primarily
employed at the proposing small business… With an STTR, the principal investor could be primarily employed at either the research institute or small business.”

Second, SBIR and STTR programs differ in how much work can be subcontracted. For STTR, 60 percent of the research effort may be subcontracted, but for SBIR, only 33 percent can be subcontracted in Phase I, and 50 percent in Phase II.

SBIR and STTR also share many of the same requirements, although those requirements themselves are exhaustive and highly specified. For a full list of specific requirements, visit requirements.

Angel Funding vs. Venture Capital

Two other options to consider are angel funding and venture capital. Angel funding and venture capital are awarded by individuals or firms rather than federal agencies. As such, the grants awarded may be smaller, but no less helpful.

Both angel investment and venture capital primarily seek to fund startups or emerging companies with a high potential for growth, but maybe not enough capital to secure loans. As these investments are seen as high risk, both expect and require a high return on investment.

When a company receives angel or venture capital funding, they are selling an ownership stake in their company. Venture capitalists will almost always require a seat on the board in return for investment, and, although angel investors are less likely to ask to be on the board, they can own between 10 to 50 percent of your company.

When and How Much

Steve Carpenter, Vice President of Life Sciences Greenhouse of Central Pennsylvania

Now the question becomes, when do you apply for financial assistance and how much should you ask for.

According to Steve Carpenter, senior vice president of Life Sciences Greenhouse of Central Pennsylvania, there are two key factors in this decision. “One thing to remember is that future funding relies on you meeting your milestones on time and on budget,” he said.

Almost all investors will have benchmarks they expect you to meet. Think about those benchmarks and consider how much
money is absolutely necessary for meeting them within an appropriate amount of time, and start from there.

Second, there is a timeline for receiving money. The farther down the line of development you are, the longer it takes for funding sources like venture capital, loans and bonds to come through. Carpenter explains that it can take six to 12 months!

So how do you figure this out?

Create a Pro Forma

A pro forma is a predictive financial business plan that takes past statistics into account to create a statement of what the company hopes to earn and its probable expenses. In his lecture, Brian Slawin of Ben Franklin Technology Partners, referenced LendGenius’ article Use Pro Forma Financial Statements for Business Planning and Control, by Jackie Lam.

In the article, Steve Broyles of Broyles & Company CPAs lays out three ways pro formas help create a financial plan: they are a valuable tool for creating budgets; the resulting budget will be used to measure variances, favorable and unfavorable results; and allow small business owners to monitor, measure and adapt as needed to achieve the desired outcome.

Combine this predictive financial plan with your timeline and you should be better prepared to write your proposal.

But what about startups that don’t have past statistics to base their pro forma on? Analyze your market. By performing a detailed marketplace analysis of similar companies, you can estimate your own profitability and illustrate how your company provides something different or stands out in the marketplace.

Most importantly, always remember that gathering and analyzing past or market data and creating your pro forma takes time. Make sure you allocate the time needed to make it as accurate as possible.

Applying for Funding

After deciding what type of investor is best for you, sometimes it’s best to get a second opinion. Andrea Johanson, senior principal consultant
at BBC Entrepreneurial Training and Consulting advises to “make contact with the program director. There is no harm in asking and seeking help.” Henry Ahn, SBIR/STTR program director at the National Science Foundation adds, “Don’t be afraid to come in with specific questions.”  Investors want what is best for you and, subsequently, what is best for them. When you seek advice, everybody wins!

When applying, you must review the application-specific guidelines when applying. Each application is unique, so always create a new application if you are applying to multiple programs and investors. There are, however, a few items that are universal.

Answer the question, “Why should anyone care?” Tell the story of your product or service, define your “aha!” moment and clearly state what makes your team and your product innovative and worth their investment.

Don’t get caught up in jargon. Investors aren’t experts in your field. “Make it easy to read and easy to understand,” Johanson advises. She also adds, “Make it look good. The reviewer has to want to read that thing.”

Similarly, remember to proof your application. Have someone else review it for readability and clarity. “Number one: start early,” Johanson says. Give yourself enough time to thoroughly research your investor and their guidelines, and to write, review and rewrite your application.

Never Give Up

It’s important to keep in mind that you may not be accepted the first time around, but failure is the best teacher. Ahn advises to always review the panel summary and understand the reasons your application was rejected. If you can address the issues brought up, always resubmit.

Maureen Mulvihill, president and CEO of Actuated Medical Inc. shared one last piece of advice for all entrepreneurs: “Don’t let anyone tell you, ‘You can’t.’ If you get rejected for the grant, address the critique and keep moving forward.”